How to Select the Best Term Insurance Company?

by SMCIB on Wednesday, 05 April 2023

How to Select the Best Term Insurance Company?

Imagine that your spouse is an adventurous person who wants to try out bungee jumping. You know it comes with many dangers and obstacles, and so, you want to make sure they are prepared for anything that comes their way. For this, you ask them to use protective gear like harnesses, safety helmets, etc. to enjoy the adventure while being cautious.

Similarly, life is full of uncertainties, and it is essential to have a safety net to protect your loved ones, especially if you are the one providing for them. This is where Term Insurance comes in. It provides financial protection to your loved ones in case of unfortunate events.

However, with so many insurance providers out there, it can be overwhelming to choose the right one. In this article, we will discuss how to select the best term insurance company that suits your needs. So, let's dive in!

 First, What is Term Insurance?
Term insurance is a simple and effective way to provide financial security for your loved ones in case of an unfortunate event.

It is a type of life insurance policy that offers a fixed payout to your loved ones if you pass away during the policy term. This payout can be used to replace your lost income and ensure that your family is able to meet their financial needs without  compromising on their lifestyle and dreams.

Since a term insurance policy is a pure risk cover, it does not offer any maturity or survival benefits. In other words, if you survive the policy term, you will not receive any payout or benefit from the insurance company.

The purpose of term insurance is to protect your family's financial future. You will want to ensure that your family receives the sum assured without any complications at the time of claim - when you are not around anymore. This is why choosing the right insurance company for your term insurance plan is important.

How To Select The Best Term Insurance Company?
Here are some of the factors you should look out for - 

1️⃣ Features/benefits offered
When selecting an insurance company, it is crucial to compare the coverage benefits and features offered by each of them. The scope of coverage provided by the insurer is a critical factor to consider as it determines the level of protection your family will receive. A term insurance policy with a wider scope of coverage typically means better benefits for your family.

2️⃣ Premiums payable
The next deciding factor is to consider the premiums charged by each insurer. The premium is the amount of money you will have to pay regularly to keep your coverage active. You should look for an insurance company that offers the best coverage and features at the most affordable premiums. This will make sure that you get the best value for your money.

3️⃣ Claim Settlement Ratio
The Claim Settlement Ratio of an insurance company is an important factor to consider when choosing a term insurance plan. It shows how effective and reliable an insurer is in settling claims. The Claim Settlement Ratio represents the number of claims settled by the insurance company in a financial year against the total number of claims received. An insurance company that consistently maintains a high Claim Settlement Ratio ratio is generally considered trustworthy and reliable. There are higher chances of your family’s claim being settled by the company in the future.

4️⃣ Solvency Ratio
The solvency ratio is an important metric that reflects the financial strength of the insurance company. The Insurance Regulatory and Development Authority of India (IRDAI) mandates that insurance companies maintain a solvency ratio of at least 150% - to protect themselves from financial crisis or bankruptcy.

You should choose an insurance company with a higher solvency ratio. It indicates that the insurance company has enough assets and cash flow to meet its liabilities and settle claims, even if its business sees a financial slump. This will ensure that your family’s claim is settled no matter the situation.

 5️⃣ Reviews and ratings
Checking the reviews and ratings of an insurance company can be a helpful way to assess the company's reputation and customer service quality. By checking their social media handles, reading online reviews, and talking to current or past policyholders, you can gain insights about the insurance company. This will help you a great deal in determining which insurance company is better than others.

6️⃣ Customer care service
Another important factor to consider when choosing the best term insurance company is to check its customer care service. A good insurance company should prioritise providing excellent customer service to its policyholders. This is because insurance can be a complex product, and customers may have related questions or concerns that need to be addressed promptly. And, at the time of claim (if you pass away while the term insurance plan is active) your family can reach out to the customer service of the insurance company in case they have any doubts. So, it is important that you pick a company that provides 24x7 customer care service.


To Conclude,
Thorough research and comparison are the cornerstones of choosing the right term insurance company. Make sure you keep the factors discussed above in mind to make a well-informed decision. After all, this is a choice that will not impact you, but your family’s financial future. And you want the best for them, right?


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